June 14, 2008	Saturday	Jamadi-us-Sani 09, 1429

KARACHI, June 13: Moody’s Investors Service maintains a stable outlook on Pakistan’s rating saying the structure of government debt largely consists of long-term credits from official bilateral and multilateral lenders, which adds stability and reduces rollover risks.

However, Moody’s took a critical note of the political front as it said on Friday that weak governance, political tensions and flaws in the legal system will undermine institutions and policy-makers, and heighten risks of sudden shift in private investor’s confidence.

Moody’s said sharply widening deficits in Pakistan’s fiscal and current accounts are reversing a multi-year trend of fiscal consolidation and debt reduction. Concurrently, renewed political discord is unlikely to provide the stable and orthodox policy framework necessary for quickly limiting these macroeconomic imbalances.

Both Moody’s and Standard & Poor’s had cut Pakistan’s credit ratings to five levels below investment-grade last month. The S&P went ahead to opt for a negative outlook.

Moody’s said the prospect of external assistance from bilateral donors and multilateral institutions is expected to provide some degree of balance of payment and budget support.

The discouraging report on Pakistan was not surprising as the government itself had been saying the country is facing difficult economic situation and it assured to reduce the record high fiscal deficits of over 7 per cent